FOMC Rate Hike Sends Gold Prices Tumbling Despite Bullish Fundamentals

The Federal Open Market Committee (FOMC) is the rate-setting committee of the Federal Reserve, responsible for setting the federal funds rate and steering the Fed's bond holdings. With nineteen members attending each meeting, twelve of whom vote, the FOMC sets monetary policy for the US economy. The committee meets eight times a year to discuss interest rates and inflation expectations.

At its most recent meeting on September 16, 2026, the FOMC voted unanimously to raise its target rate by 25 basis points, setting it at 3.75%-4.00%. This is the first hike since 2023. The next meeting will take place on October 27-28, 2026.

The price of gold has been affected by the Fed's decision, but not directly. Instead, gold moves based on real yields, which are interest rates adjusted for inflation. When real yields turn negative, gold becomes cheaper to hold since it pays no yield of its own. Historically, negative real yields have led to a sustained gold bull market.

Gold and silver prices have pulled back in recent months, with gold trading near $4,297 an ounce, down from its January 2026 record of $5,589.38. Silver has also retreated, trading near $64.56, from its own record above $121. A hike in interest rates usually competes with gold for investor capital since it pays no yield.